Jio brands telcos' claim of incurring losses due to IUC as 'myth'

Jio alleged that two established operators had made 'excess recovery' to tune of nearly Rs 1.2 lakh crore.

Update: 2017-07-20 04:15 GMT
Company reported EBITDA of Rs 1,443 crore in July-September 2017 period with margin pegged at 23.5 per cent.

New Delhi: Reliance Jio has dismissed the claim that incumbent telecom operators are incurring losses due to reduction in call connect charges as "myth" and alleged that two established operators had made "excess recovery" to the tune of nearly Rs 1.2 lakh crore.

In a presentation on Tuesday to the telecom regulator on the Interconnection Usage Charges (IUC), a key input for mobile tariff fixing, Jio alleged that these rates have risen from 10 per cent of voice call charges in 2003 to 45 per cent of call charges in 2017.

"Increase in voice traffic has been 7,200 per cent in this time period," Jio's presentation said debunking claims that incumbent operators were making losses due to reduction of IUC charges. "Operators have made significant excess recovery over actual cost of termination...The number one operator has made excess recovery of Rs 73,385 crore, number 3 operator has made excess recovery of Rs 45,940 crore," Jio said without naming the rival operators.

E-mails sent to large operators seeking their comments on Jio's allegations did not elicit any response. Meanwhile, the new entrant alleged that incumbent operators have made surplus on IUC due to delay in reduction of the charges by TRAI on account of court proceedings. "Incumbent operators have benefitted by almost Rs 1 lakh crore in the last 5 years alone due to non-implementation of the TRAI Report of 2011," Jio said.

TRAI in an affidavit filed before Supreme Court in 2011 had said that telecom operators should be given time till 2014 to move to bill and keep regime. Under this, operators only keep record of incoming calls on their network but don't raise any demand from other operators.

Taking a dig at established operators who are pushing for doubling mobile call termination charge, Jio said no new investment has been made in voice networks for the last 7-8 years, and that cost of voice networks have been recovered manifold.

"There is practically nil cost in IP based networks - incumbent operators will launch VOLTE prior to the end of the year," Jio said terming IUC as an artificial barrier created by incumbent operators with legacy technology.

Incumbent operators -- Bharti Airtel, Vodafone and Idea Cellular – on Tuesday sought doubling of interconnection usage charge (IUC), a key input for mobile tariffs, saying that terminating incoming calls on their networks costs 30-35 paise per minute.

At present, mobile termination charge of 14 paise per minute is levied on every domestic incoming calls by the telecom operator receiving it. Any change in IUC has a direct impact on mobile call rates as the charge is taken into account while setting telecom tariffs.

The new entrant Reliance Jio, however, batted for levying no charge on incoming calls.


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